This story is from February 12, 2008

Sensex trips on Rel Power listing

T Surendar / TNN / Feb 12, 2008, 03:20 IST

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Reliance Power listing was one of the major reasons why the sensex fell 834 points, its third biggest fall ever. In the bargain, investors lost Rs 2,17,945 crore in wealth.

MUMBAI: When Anil Ambani struck the ceremonial gong at the Bombay Stock Exchange to announce commencement of trading at 9.55 am on Monday morning, traders waited at their terminals with bated breath. There was a chance, unthinkable though it seemed, that a scrip from the house of Reliance could open below the issue price.
Everyone sighed with relief when Reliance Power, perhaps India's most anticipated listing, made its debut at Rs 548.The relief lasted a few minutes. The younger Ambani, who had collected a record Rs 7.50 lakh crore a few days ago, saw the price tumble to Rs 430, a discount of Rs 20 on the offer price.
The disappointment of retail investors who had bought shares hoping to make a quick killing, spooked the market and sent share prices hurtling downwards. Eventually, this listing was one of the major reasons why the sensex fell 834 points, its third biggest fall ever. In the bargain, investors lost Rs 2,17,945 crore in wealth.
Barely a month ago, there seemed to be no stopping the sensex. On January 10, the index touched a record high of 21,207, and local companies were planning to raise a record Rs 64,000 crore by issuing new shares. With the sudden meltdown, all their plans now seem to have been a pipe dream.
What has changed so drastically? In one word, sentiment. Euphoria has given way to fear, much of it triggered by a run of bad news.
Some of the problems are real. More evidence of losses in the global financial sector emerged towards the end of last year, slowing down stock market investment by foreign investors. So far this year, FIIs have withdrawn $3 billion as against $17 billion invested through last year. A few, like Citibank's regional investment arm, are said to have liquidated a big chunk of their assets, putting pressure on prices.

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